REIT Earns $2.2 Million in First Quarter of Operation

Health Care Property Investors Inc., a new Costa Mesa-based real estate investment trust whose portfolio primarily contains health-care facilities, announced Wednesday that it earned nearly $2.2 million in its first quarter of operations.

For the period ended Sept. 30, the company, which started business May 30 with the sale of $96 million worth of stock, had revenues of $4.3 million. Between May 30 and Sept. 30, the company posted profits of $2.8 million on revenues of $5.6 million.

Although the profit margins appear large when compared to other companies, analysts said margins of 50% are common to real estate investment trusts. The trusts, called REITs, commonly act as a conduit, passing through to their shareholders income generated by the real estate properties held by the company, explained Jerald Weintraub, an analyst with Davis Skaggs Shearson in San Francisco.

In the case of Health Care Property Investors, profits are further enhanced by the fact that it purchased its holdings outright and holds no debt.

Weintraub said the company is being watched by the industry because it has chosen to focus on medical properties, which could be a hot market in the future.

Furthermore, Weintraub said the trust is expected to benefit from its close relationship to National Medical Enterprises Inc., the Los Angeles health-care giant. The company owns 9.8% of the trust's stock and its NME Properties Inc. subsidiary is acting as an adviser to the trust.

In August, the trust announced that it was buying a 120-bed rehabilitation hospital in Dallas.